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Tickers in this Article: PSEC, LFC, ENH, BAP, WBK, PRU, PRE
So far today, the Nasdaq is trading down 0.5%, the S&P 500 has moved little and the Dow has slipped 0.2%. The financial sector is the category of stocks containing firms that provide financial services to commercial and retail customers. This sector includes banks, investment funds, insurance companies and real estate. Financial services perform best in low interest rate environments. A large portion of this sector generates revenue from mortgages and loans, which gain value as interest rates drop. Furthermore, when the business cycle is in an upswing, the financial sector benefits from additional investments. Improved economic conditions usually lead to more capital projects and increased personal investing. New projects require financing, which usually leads to a larger number of loans.

While the market overall has shown little change, the Financial sector (XLF) is up 0.6% and its current biggest movers are:
CompanyMarket CapPercentage Change
Prospect Capital Corporation (Nasdaq:PSEC)$1.45 billion-6.7%
China Life Insurance Company Ltd. (ADR) (NYSE:LFC)$74.83 billion+2.9%
Endurance Specialty Holdings Ltd. (NYSE:ENH)$1.62 billion-2.7%
Credicorp Ltd. (USA) (NYSE:BAP)$9.74 billion+2.2%
Westpac Banking Corporation (ADR) (NYSE:WBK)$66.38 billion+2.1%
Prudential Financial (NYSE:PRU)$22.06 billion+1.6%
PartnerRe Ltd. (NYSE:PRE)$4.87 billion-1.4%
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Prospect (Nasdaq:PSEC) is trading at $11.10 per share, down 6.7%. This morning, 9.3 million shares have been traded, whereas yesterday, volume was only 1.8 million shares. High volume indicates a lot of investor interest while low volume indicates the opposite. Valuation ratios allow the investor to make a quick determination as to a company's investment value. A company's price/earnings ratio (P/E ratio) provides a measure of how expensive or cheap a stock is. PSEC's P/E ratio of 7.1 is under the industry average of 16.16. A low P/E might arise due to substantial inherent risk of the firm and its operations, poor return on equity, or improper valuation of the market. From the investor's perspective, a stock with a lower ratio is relatively cheaper than a stock with a higher ratio. SEE: How To Use The P/E Ratio And PEG To Tell The Future Of A Stock

China Life Insurance Company Ltd (NYSE:LFC) has moved up 2.9% and is currently trading at $40.85 per share. The company is currently trading a volume of 81,366 shares. This is 0.2 times its average volume over the past three months. As a stock moves up or down, it is important to pay attention to the trading volume. This indicates the level of interest: the higher the volume, the more the interest. A wide array of ratios can be used by investors to estimate the attractiveness of a potential or existing investment and get an idea of its valuation. Using price/earnings ratios (P/E ratios) does not give an indication of whether or not an individual company's ratio is reasonable, a shortcoming that can be corrected by using the price/earnings to growth ratio (PEG ratio). LFC has a PEG ratio of 1.24, which is consistent with the industry average. While P/E ratios are important indicators of market value, a high P/E in and of itself is not bad because it may indicate a company whose earnings are growing very rapidly, so many investors look at the PEG ratio in order to get an idea of whether or not a particular P/E ratio is justified by underlying earnings growth.

Falling 2.7%, Endurance Specialty (NYSE:ENH) is currently at a share price of $36.23. So far today, 185,648 shares have changed hands. A stock's volume conveys how excited investors are about it. Investment valuation ratios can be very useful in estimating whether a stock price is too high, reasonable or a bargain investment opportunity. The debt ratio is calculated by dividing total liabilities by total assets. ENH has a debt ratio of 70.1%, which is on the high side. This means that most of the company's assets are financed through debt. However, one thing to note with this ratio: it isn't a pure measure of a company's debt (or indebtedness), as it also includes operational liabilities, such as accounts payable and taxes payable.

Credicorp Ltd (NYSE:BAP) is up 2.2% to reach a current price of $124.85 per share. So far today, the company's volume is 247,687 shares, in line with the current daily average. When a stock price moves up or down, watching the volume is a good way of identifying how significant that shift is. Looking at a company's valuation ratios is a good way of getting a basic idea as to its value as an investment. Dividend yield measures the income that a stock will generate for an investor. The dividend yield for BAP is 1.9%, which is on the low end. If you are an income investor, this stock may not be attractive to you. A higher dividend yield may indicate a risk of a fall in the price of the security, or a cut in the level of dividend payments, either of which would have the effect of dropping future returns. SEE: Due Diligence On Dividends

After rising 2.1%, Westpac Banking Corporation (NYSE:WBK) is currently trading at a share price of $111.88. The company's volume is currently 12,844 shares. This is less trading activity than there was yesterday. If a stock price moves on high volume, this means that the change is a significant one. Investors can make use of valuation ratios to estimate whether a stock is fairly valued. One of the favorite tools of many value investors is analyzing price/book value ratios, as it provides a measure of the underlying value of a company's assets as compared to the valuation of its equity. WBK has a P/B ratio of 1.53 which shows that its share price is higher than its book value. This implies that investors expect management to create more value from a given set of assets and/or that the market value of the firm's assets is significantly higher than their accounting value. P/B has its shortcomings but is still widely used as a valuation metric, more relevant for use by investors looking at capital-intensive or finance-related businesses, such as banks; book value does not carry much meaning for service-based firms with few tangible assets. SEE: How Buybacks Warps The Price-To-Book Ratio

After an increase of 1.6%, Prudential (NYSE:PRU) has reached a current price of $47.80. At 815,113 shares, the company's volume so far today is 0.3 times its average over the past three months. Volume is an important indicator because it indicates how significant a price shift is. While investment valuation ratios are useful tools in estimating the attractiveness of an investment, remember that it is important to look at a company's historical performance and compare the company ratios with its competitors and industry overall. The debt-equity (D/E) ratio is a measurement of how much suppliers, lenders, creditors and obligors have committed to the company versus what the shareholders have committed. The D/E ratio for PRU is 80%. This easy-to-calculate ratio provides a general indication of a company's equity-liability relationship and is helpful to investors looking for a quick take on a company's leverage.

PartnerRe (NYSE:PRE) is currently trading at a share price of $74.35, a 1.4% decline. The company is currently trading a volume of 320,649 shares. Volume indicates the level of interest that investors have in a company at its current price. Valuation ratios include the price to earnings (P/E) ratio, the price to earnings growth (PEG) ratio, the price to sales (P/S) ratio, the price to book (P/B) ratio, and the dividend yield. The capitalization ratio is calculated by dividing long-term debt by the sum of long-term debt and shareholders' equity. PRE has a low capitalization ratio of 10.8%. Investors generally consider a company with low debt and high equity levels is a good quality investment. Prudent use of leverage (debt) increases the financial resources available to a company for growth and expansion.

The Bottom Line No matter the economic climate, Wall Street will always have stocks that make major moves each week. Paying close attention to the previous ratios will help you identify key times to adjust your strategy. Keep in mind that all these ratios should be compared against historical numbers and industry information in order to get a more complete picture.

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